Coinbase Vs SEC: Ripple CTO Highlights Flaws In Amicus Brief

The ongoing legal dispute between Coinbase Global Inc, a publicly listed trading platform, and the United States Securities and Exchange Commission (SEC) has attracted significant attention within the industry. Ripple’s Chief Technology Officer (CTO), David Schwartz, recently shared his perspective on the Amicus submissions made by various stakeholders in support of Coinbase. 

Are the Reactions Justified or a Weak Attempt? 

The Amicus submissions, which are legal briefs filed by parties not directly involved in the case but with an interest in its outcome, have generated notable backing for Coinbase Exchange.  Industry giants like Andreessen Horowitz (a16z) and Paradigm, as well as six law professors from esteemed institutions such as Yale, the University of Chicago, the University of California Los Angeles, Fordham, Boston University, and Widener University, have all expressed their support for Coinbase through these filings. Supporting the exchange Senator Cynthia Lummis has also raised her voice on the matter in the congress. 

While the arguments presented in these Amicus Curiae briefs have contributed to weakening the SEC’s securities claims, experts like David Schwartz have pointed out certain flaws in the presented arguments. 

In his X post, Schwartz said that the brief doesn’t effectively address the significance of the Joiner case’s holding. Notably, Joiner is a pivotal Supreme Court case that accurately interpreted the definition of an investment contract.

The prevailing sentiment among legal experts suggests that the SEC’s case against Coinbase is weak. This perception is transpired by the decision of the lawyer representing XRP holders, who chose not to file an Amicus Brief in the Coinbase vs. SEC case due to the perceived weakness of the SEC’s claims against the trading platform. Echoing a similar sentiment, Twitter user David Barrera said law experts have ignored Joiner’s true holding.

A prevalent viewpoint holds that the trading of digital currencies on secondary platforms should not be classified as securities. This interpretation draws support from the XRP ruling delivered by Judge Analisa Torres. Given these factors, many observers believe that Coinbase holds favorable odds in the ongoing legal battle against the regulatory body, and there is a widespread belief that the trading exchange might emerge victorious in this case. 

In June, the SEC sued Coinbase for selling securities other than Bitcoin (BTC).

SEC vs Crypto? Will it Impact Spot Bitcoin ETF Approval? 

The SEC has been getting tougher on cryptocurrencies. Recently, Bittrex paid the SEC $24 million for unlicensed exchange operations. The SEC also filed an interlocutory appeal of the Ripple Labs summary judgment order, which was considered a negative development.

However, looking at the other side it will also negatively impact the latest buzz related to Spot Bitcoin ETF Approval. In this context, Former SEC attorney John Reed Stark believes the current SEC will not approve a Bitcoin spot ETF application for many reasons. He argues that a Republican-led administration would be more crypto-friendly, facilitating spot ETF approval. The SEC so far has rejected all spot Bitcoin ETF applications.